Client Challenge: The client thought they had a valid Research and Development (R&D) claim and asked their accountants to assist them with making a claim. Their accountants were not 100% certain about which activities qualified but submitted a small claim anyway.
Approach: We initially contacted the MD via a cold call and offered to do an audit to check whether they had claimed all they could claim under the R&D tax credit scheme. They are software developers with their own licensed software and they also develop bespoke technology solutions for their clients which are in the main small retailers.
We met the MD, looked at the paper trail for his claims and asked him about his software development activities.
From an initial free R&D audit we identified that they had significantly under claimed their qualifying R&D costs. On top of that the costs they had claimed had been worked out as a portion of their total costs, which meant that some of the costs would most likely be rejected by HMRC if they looked in detail at the claim.
We helped the MD identify all their qualifying activities and costs, giving them a standard spread sheet to capture the costs and we wrote up their R&D technical justification document, to make their case, based on an interview with the MD.
Outcome: Companies can go back two years and make retrospective claims so we were able to amend their last two claims and as a result increased the total value of their claim by £45,000 over three years (i.e they paid £45,000 less in corporation tax). This was all done with very little input needed by the MD who was extremely busy at the time.
Posted by Linda Eziquiel R&D tax credit specialist
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